State asked to pull money out of bail bond industry

OLYMPIA – Washington should pull its money out of stock funds that profit from bail bonds, a group of protesters told the state Investment Board on Thursday.

Requiring a defendant to post cash bail doesn’t facilitate justice but creates a system that penalizes the poor who either can’t afford bail or get trapped in a “predatory” system, Abbey McMahon, a King County public defender, said during the board’s public comment period.

“The rich can walk free from pretrial detention while the poor rot in jail,” said McMahon, who urged the board to “take a stand and do the ethical thing.”

The thing that McMahon, members of the American Civil Liberties Union, a racial justice group the Color of Change and the Private Equity Stakeholder Project want the board to do is divest its holdings in Endeavor Capital Equity funds that have bail bond companies and other businesses they consider questionable among their holdings.

The groups also have a petition drive, which they say has collected about 11,000 signatures, asking for the board to pull money out of Endeavour Capital and not invest new money in funds the group develops.

The Investment Board oversees more than $134 billion in assets for various public employee retirement plans and other funds that support colleges and developmental disability programs. That includes private equity holdings that stood at about $22 billion at the end of 2018. It has about $267 million invested in three Endeavour Capital Funds, or slightly more than 1% of its private equity holdings.

The board didn’t take any action on the request Thursday. Chris Phillips, a spokesman for the board, said it rarely divests from a fund once the decision to invest has been made; if it does, the decision to pull out is based on the fund’s financial performance, not solely on a public policy question.

“For strategic reasons, they could sell it,” Phillips said. If that happens, however, the board could lose money on the investment.

The board is informed of what a fund plans to invest in when Endeavour or any other firm sets up a fund, he said. But once the board agrees to join a fund, it doesn’t have the ability to tell managers what to do.

“It’s very unlikely that any of these issues would impact current investments,” Phillips said. “The board members will actively question staff and the investment partner during consideration of future investments.”

Protesters said after the meeting they intend to continue to push for the board to divest from Endeavor funds.

The equity fund did not immediately return a call seeking comment.